Hi Guys
I have got 9 properties plus my own home and I with the growth over the last few years (Perth) I have been able to release 3 titles (worth about $800,000).
I know I can go to lenders to borrow more to purchase more properties against these titles, however I want to know how I can purchase a house in a better area, perhaps with views, for myself. My own home has been used to secure some of the other properties plus a LOC.
I realise that if I do purchase a home with the 3 titles then I would have to service the loan and I am pretty much at my maximum for serviceability. I am very confused and would appreciate your advice.
Regards
Anita[wacko]Hi Anita
This is one of the battles with X collaralised loans where the lender can dictate what you pay off when you sell or release a particular security.
There are 2 main issues here:
1) Your own home being tied up with the Ip’s though a X Collaralised structure and these would need to be worked through individually with Anz. Certainly not unsumountable but will take time to see what the assessed values they have on each property and whether your own home can be released.
Whilst you could sell one of the older IP’s (one where you will benefit from the halving CGT) and free up capital to purchase your new home you may find that the Bank require some of the realised profit to be paid of another loan or held as cash security.
2) This issue comes with your new home. If you raise funds to purchase the property and intend to rent it out the interest becomes a deductible expense. Structured correctly you could purchase this property utilising the security itself as well as additional borrowing against 1 or more of the other unencumbered titles. The rent can be used to ffset the interest payable as well as the Depreciation and Building Write off ect (if applicable)
When you decide to move into the property the interest would be no longer tax deductable. You will have 2 options:
A) To sell you current PPOR and then use the funds to repay any loan used to funds the Geraldton property.
Sell the property to an Trust and rent it out making the interest again deductable.Again the issue of the X collateralised loans come into play as Anz may of course dictate where the funds go.
All in all not a major problem however just needs to be wortked through logically.
Unfortunately unless you sell your PPOR immediately and move into the new property the only way to secure the new home would be to borrow money (We will assume the Vendor will not offer a rent / buy or similar arrangement). What you need to achieve is that these funds are borrwed in the most tax advantaged way.
Cheers
Richard Taylor
Residential & Commercial Finance Broker.
Licensed Financial Planner. Ph: 07 3720 1888
[email protected]
Looking for life cover – We Guarantee to beat any quote you have in writing.Richard Taylor | Australia's leading private lender
Sell the property to an Trust and rent it out making the interest again deductable.You must be logged in to reply to this topic. If you don't have an account, you can register here.
